published : 2023-12-10

Are Annual Reviews Going Away? What This Means for the Workforce

Small business owners are more likely to skip annual performance reviews (or the task to create one if not provided)

A group of employees engaged in a team-building activity, taken with a Nikon D750.

With the U.S. job market still robust and unemployment low, more companies are moving away from formal annual performance reviews and performance improvement plans (PIPs) in an effort to reduce manager criticism and share feedback in a more constructive way, according to experts.

Smaller employers in particular have become more focused on motivating employees rather than micromanaging.

Performance reviews are more commonly conducted at larger or publicly traded companies, while the policies regarding performance reviews at smaller companies tend to fluctuate.

Many organizations, especially smaller firms, have surveyed their employee base and found that many employees don’t find the review process all that effective.

Workers today have unprecedented choice despite a recent slight cooling of the once white-hot job market.

A small business owner addressing their employees during a motivational meeting, taken with a Canon EOS 5D Mark IV.

The notion of ‘performance evaluation’ needs to be more than an annual HR exercise, but rather an ongoing dialogue about objectives, performance accountability, and development.

The rise of remote and hybrid work models accentuates the necessity of this continuous performance connection with every worker, ensuring engagement and growth regardless of location.

Employers can share a plan for improvement and success with employees, even without the formal structure of a performance improvement plan in place.

Business leaders must outline opportunities for skill development, career advancement, and how the employee aligns with the company’s overall mission, vision, and values.

Business leaders must reimagine performance management as a tool for engagement rather than a mere grading system.

A manager providing constructive feedback to an employee in a private office, taken with a Sony Alpha a7 III.

Managers can choose to share feedback outside of a formal annual review through formal weekly, biweekly, or monthly check-ins as well as ongoing informal communication.

Praising employees builds confidence and motivates employees to be productive.

Even a ‘good job’ via email is a form of feedback that can leave employees feeling appreciated and confirm they are on the right path.

For constructive criticism, many employees appreciate a more private setting such as a one-on-one meeting via video call or in their manager’s office.